FA – Nov 2019 – L1 – SB – Q1c – Trial Balance: Usefulness and Limitations

Extracts a trial balance from the given ledger account balances.

Question

Question:
c. Using the following list of balances extracted from the ledger accounts of John Thomas Enterprises, the MD/CEO wants you to confirm if the various double entries passed by the newly employed accounts officer were arithmetically correct:

Description	N’000
Revenue	53,000
Purchases	32,200
Property, Plant, and Equipment (Cost)	59,000
Accumulated Depreciation	25,000
Inventory as at July 1, 2018	7,800
Interest Expense	200
Administrative Expenses	7,000
Accrued Expenses	400
Distribution Cost	8,900
Retained Earnings	23,500
Bank Overdraft	1,000
Cash and Cash Equivalent	200
Accounts Receivables	9,000
Finance Cost	1,000
5% Loan Note	5,000
Share Capital	10,000
Other Components of Equity (OCE)	5,000
Accounts Payables	2,400

Required:
Extract a trial balance for the period ended June 30, 2019. (10 Marks)

Answer

John Thomas Enterprises
Trial Balance as at June 30, 2019

Debit (N’000)	Credit (N’000)
Purchases	32,200
Property, Plant, and Equipment (Cost)	59,000
Inventory as at July 1, 2018	7,800
Interest Expense	200
Administrative Expenses	7,000
Distribution Cost	8,900
Cash and Cash Equivalent	200
Accounts Receivables	9,000
Finance Cost	1,000
Total Debit	125,300
—————————————-	————————————-
Revenue	53,000
Accumulated Depreciation	25,000
Retained Earnings	23,500
Bank Overdraft	1,000
5% Loan Note	5,000
Share Capital	10,000
Other Components of Equity (OCE)	5,000
Accounts Payables	2,400
Accrued Expenses	400
Total Credit	125,300

Explanation:
The trial balance confirms the equality of debits and credits, showing the arithmetic accuracy of the ledger balances. It also indicates that no single-sided entries were made, ensuring the integrity of the double-entry accounting system.

Tags: Double Entry, Extraction, Ledger, Trial Balance
Level: Level 1

Topic: Trial Balance: Usefulness and Limitations
Series: NOV 2019

Uploader: Dotse